Equipment was acquired at the beginning of the year at a cost of $465,000. The equipment was depreciated using the straight-line

Equipment was acquired at the beginning of the year at a cost of $465,000. The equipment was depreciated using the straight-line method based on an estimated useful life of 15 years and an estimated residual value of $45,000.

a. What was the depreciation for the first year?
b. Assuming the equipment was sold at the end of the eighth year for $235,000, determine the gain or loss on the sale of the equipment.
c. Journalize the entry to record the sale.


Answer:
a. $28,000 [($465,000 – $45,000) ÷ 15]
b. $6,000 loss {$235,000 – [$465,000 – ($28,000 × 8)]}








c. Cash 235,000
Accumulated Depreciation—Equipment 224,000
Loss on Sale of Equipment 6,000
Equipment 465,000



Equipment acquired at the beginning of the year at a cost of $280,000 has an estimated residual value of $45,000 and an estimated useful life of 16 years. Determine (a) the double-declining-balance rate and (b) the double-declining-balance depreciation for the first year.


Answer:
a. 12.5% = [(1/16) × 2]
b. $35,000 ($280,000 × 12.5%)




A building acquired at the beginning of the year at a cost of $1,375,000 has an estimated residual value of $250,000 and an estimated useful life of 40 years. Determine (a) the double-declining-balance rate and (b) the double-declining-balance depreciation for the first year.


Answer:
a. 5% = [(1/40) × 2]
b. $68,750 ($1,375,000 × 5%)